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Friday, August 17, 2012

Short Takes: Bogle on Stocks, Pumping up Mortgage Penalties, and more

John Bogle says the recent past has been the “worst time for investors that he has ever seen,” but “long-term investors must hold stocks, because risky as the market may be, it is still likely to produce better returns than the alternatives.”
Canadian Mortgage Trends reports that the 3-months interest penalty on some mortgages is based on a higher interest rate than your actual mortgage rate. Maybe people need to start hiring lawyers to read their mortgage contracts.

Rob Carrick gives us some tongue-in-cheek definitions of financial terms. I liked “Contrarian: Someone who is wrong in predicting what will happen, but in a different way than the herd.”

Big Cajun Man details his experience trying to get a reasonable deal on a new cellphone from Telus.

Canadian Capitalist has a guest post about whole-life insurance. It turns out that if you compare the return in the investment portion of a whole life policy against long-term bond rates, it looks reasonable. But the whole life policy doesn’t look very good compared to expected stock returns. So, a whole life policy should be viewed as partially life insurance and partly a bond issued by the insurance company.

Million Dollar Journey has a take from Ed Rempel about why Bill Gross is wrong about the death of equities. I prefer the simple explanation that Gross ignored the fact that dividends get spent.

Perhaps your caution is warranted, Mark Wolfinger, but I am an unapologetic bull. We've had over a decade of sub-average stock market returns. That makes me think that the next dozen or 14 years will feature above average gains.

The bears may well be caught sucking their thumbs as the market surprises on the upside. Warrent Buffett wrote an article back around 2000 predicting 14 years of below-average returns, to be followed by 14 years of above-average returns.

Yes, this could very well be wrong, since interest rates are very low, and rising rates are bad for the market. But, like I said, I'm pretty optimistic we will have good returns going forward.